Cohan questioned Smith’s motives for writing the letter; whether he was disgruntled over not getting promoted, just a frustrated banker like most, etc.

Cohan then defended Goldman as a public company that has to report quarterly earnings and is in the business to make money. As a private partnership they could be more long-term oriented.

Cohan questioned why Greg Smith was waking up to this now after “feeding off the trough for 12 years,” as many have.

Cohan said the incredible thing was that it was in the paper (N.Y. Times) at all. The “omerta” at Goldman Sachs is that you don’t do things like this.

Blodgett asked Cohan if other firms will attempt to capitalize on Goldman’s woes, to which he replied they would, of course, but believed it would blow over. Nothing will change as politicians in Washington will continue to go over to Goldman.

Blodgett asked Cohan if he believed Goldman clients were Muppets as Smith asserted in his letter. Cohan said he didn’t know what a muppet is and if it meant “idiot,” he said the clients weren’t idiots. Cohan added that Smith was working with very sophisticated derivatives and there are no idiots in that game. Clients go to Goldman to “pawn off some risk” and sometimes it works out and sometimes it doesn’t.

The conversation continued with Cohan and Blodgett discussing the culture at Goldman Sachs and the surprising lack of change despite the financial crisis.

Blodgett followed this discussion with a column where he expresses his belief Goldman’s clients are indeed muppets, or idiots. In fact anyone who invests in an actively managed mutual fund can be considered an idiot given their track records compared to passive index funds, according to Blodgett.

Disclaimer: It is very difficult to outperform a buy and hold strategy. Many investors have found themselves best served over long time horizons by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Information presented is based on analysis of past data and assessments by the Tactical Timing System model. Future performance may not reflect past performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented. Nothing presented here should be considered investment advice, but merely the humble opinion of the author.